Stocks Are So Volatile! What Are We To Do?

Fellow colleagues, just look at today’s financial news:

Stocks Tumble in US., Europe as Brexit Vote Delayed (Wall Street Journal)
Dow Drops 500 Points as Market Sell-Off Continues, Bank Shares Lead Slide (CNBC)
Dow Sinks 799 Points as Trade Truce Enthusiasm Fades (CNN)
U.S. Stocks Plunge by 500 Points Before Staging A Comeback After Volatile Morning of Trading (Associated Press)

How many times have you heard that it is not a good idea to look at your stock portfolio every day? Why? Because you are supposed to be in it for the long haul! Well, of course, that is what you are being told when there is so much uncertainty in the stock market. Doesn’t it seem like everything affects the market… wars, gas prices, politics, the Kardashians (just kidding about the last one).

The experts are preparing you for a big stock market correction, but when is it going to occur (is it happening now?), and what is going to happen to the value of your stocks? A commonly asked question is “If my stocks go down, how long will it take to make up for the losses?”. That is a real concern because it could take months or years to get back to where you were before. Why take this risk with your hard-earned money? As a fellow doctor, that is why this topic is so dear to my heart.

If this graph isn’t convincing, I don’t know what is. Just look at the difference that a $10,000 investment would have made in commercial real estate versus the S&P 500 over a long span:

No matter how the economy performs, people still need a place to live. That is why we invest in stable, income-producing commercial multifamily apartment complexes.

Why do the ultra-wealthy have a large percentage of their assets in real estate?

1) They receive passive income (mailbox money) while they are vacationing all over the world.

2) They usually do not pay taxes on this mailbox money because the depreciation usually covers the income from their investment (this is tax-deferred until a liquidation event)

3) The properties appreciate (hidden money) because the renters are paying the mortgage down.

4) They can transfer this wealth to their heirs when they die. The basis points reset, where taxes could possibly stay at zero. All this while the properties continue to make money for their children.

I ASK AGAIN, WHY DON’T MOST DOCTORS KNOW ABOUT THIS ASSET CLASS?

1) We are too busy running our practices.

2) We are too busy trying to figure out how to make up for the losses from decreasing insurance reimbursements.

3) We are too busy working more hours to make up for these losses.

4) We are too busy completing our electronic health records.

5) We are brainwashed by our advisors…telling us to avoid getting involved in something we know nothing about and letting them handle our money.

6) Maybe we are just burned out?

There has been no one to teach us. Perhaps after so many years of education, we just don’t want to be taught any more. Albert Einstein stated, “Education is what remains after one has forgotten what one has learned in school”.

Well, it’s time to listen and learn! If we are in this together, we will be able to achieve more than we ever dreamed of!

To your Wealth!

Arturo

NOW, I Finally Get It… After 23 Years In Practice

Throughout my career, I was hesitant to invest in real estate. Now I have participated in $190 million in commercial multifamily real estate acquisitions along with our asset manager partners.

Doctors, in general, tend to be very risk-averse. We are taught to invest only in things we understand. Well, the only thing we are taught in medical school is medicine. So how then, are we supposed to know how or what to invest in?

Enter financial planning. How many times are we told to “diversify, diversify, diversify”? The famous “diversification” strategies are used so that when one investment class goes down, hopefully another one will go up…and I stress “hopefully”. Warren Buffet states “Diversification is protection against ignorance. It makes little sense if you know what you are doing”. I am not against diversification, but we need to know where our money is going.

I have been there and done that. I have invested in the stock market, made money and lost money. For example, there was a time I owned quite a chunk of Apple stock. My financial advisor informed me that there were some insider trading scandals looming in the future for Apple. The advisor highly recommended that I sell all my stock, which I did. Soon after, the first iPhone was released. In retrospect, selling my Apple stock was not a good move, to say the least. For years after, I shied away from the stock market because I felt that all my financial decisions were based on someone else’s recommendations. These recommendations were loosely based on the economy, politics, oil prices, wars, etc.

So, I did what many doctors do. I started swinging for the fences, trying to get a home run on every single investment. I started a medical spa, opened an online apparel company and started a bone-conduction headphone company. I heavily invested in several startup companies. The potential payoff may still be excellent, but due to factors outside of my control like FDA clearances, etc…, it is difficult to know when that day will come.

This was my dilemma. How can I continue to perform pediatric ear reconstructive surgery, which is my true passion, and at the same time have investments that are growing, providing cash-flow and providing financial security for me and my family…regardless of the economy?

This is where I discovered commercial multifamily real estate investing. No matter the state of the economy or the state of the world, people still need a place to live. In this asset class, we profit from multiple sources: 1) Cash Flow 2) Appreciation 3) Principal Pay Down, 4) Inflation-Hedging and 5) Tremendous Tax Benefits.

In the graph below, you can appreciate how a $10,000 investment would have performed when invested in commercial real estate versus the S&P 500 Index:

I have participated in over $190 million dollars in apartment acquisitions in San Antonio, Houston, Fort Worth and Dallas. After collaborating with our asset manager partners, we founded Axon Equity, LLC to offer these unique real estate deals to our doctor partners. Our asset manager partners have over $600 million in combined assets under management.

Let’s face it. We are all in the same boat, with very similar worries about the health and business of medicine. Let’s continue to do what we trained so hard for and practice medicine with vigor and passion. Financial education is a key component to our success.

To learn more about this amazing asset class and become our partner, please watch our “Introduction to Multifamily Investing For Physicians and other Health Care Professionals” webinar. We will be having our next large investor meeting soon. Don’t miss out on our next acquisition. Feel free to call us for details at 210.696.RENT.